Animation Finance: A few Thoughts on The Inevitable Changes

A short post today, but the topic of animation finance is one that has a direct impact on the animation business. In order to get animation made, it has to be paid for, and unless you’re a multi-milionaire, that means asking someone else to pony up some dough.

The first thing to strike me was that most animated productions are produced only with the help of an outside investor. Combine that with the business model whereby networks only purchase content that is already produced, and you can see how risky the entire thing is.

The second thing I noticed was that all the talk was about investors; in other words, people looking for a proper return rather than simply their money back with interest.

After reading that, I couldn’t help drawing comparisons to Disney and Fleischer in the 1930s. Both studios had large expansion plans, but both went different ways about funding them. Fleischer went to Paramount and essentially got them to fund the studio in Miami, whereas Disney went to Bank of America and got an [admittedly] large loan.

Why does this matter? Well with Paramount as their ‘investors’ Fleischer was ultimately beholden to them when things started to go south. Paramount simply came in and took control, as was their right to do. In contrast, when Disney started to hit bumps in the road during the lean years, Bank of America had an actual interest in keeping the studio running at all costs. If they didn’t there was no chance of them being repaid.

Other aspects that seem to come into play are that an outside investor seems to have a say in the production. Hence the surge of Kickstarter and similar crowdfunding projects where the funding comes with relatively few strings attached.

Personally, it is preferable from a studio perspective to have a loan with definite repayments and interest. The reason is simple insofar that as long as it is being repaid on schedule, the production is free from outside interference.